"Lobbying for Globalization" (with Paola Conconi and Mathieu Parenti). Previously circulated as "Globalization For Sale", CEPR Discussion Paper 14597. Conditionally accepted for publication in the Economic Journal
Abstract: Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, we construct a unique dataset that allows us to identify which firms lobby on Free Trade Agreements (FTAs) negotiated by the United States, their position (in favor or against) and their lobbying effort on the ratification of each trade agreement. Using this dataset, we show that lobbying on FTAs is dominated by large internationalized firms, which are in favor of these agreements. On the intensive margin, we exploit exogenous variation across FTAs to show that individual firms put more effort supporting agreements that generate larger potential gains – larger improvements in their access to foreign consumers and suppliers and smaller increases in domestic competition – and that are more likely to be opposed by politicians. To rationalize these findings, we develop a new model of endogenous lobbying on trade agreements. In this model, heterogeneous firms select into trade and choose whether and how much to spend lobbying on the ratification of an FTA, and politicians may be biased in favor of or against the agreement.
"Betting on the Wrong Horse: lobbying on TPP and the 2016 U.S. presidential election" (with Moritz Hennicke)
Featured in a column of the Turin Centre on Emerging Economies (OEET), Università di Torino
Abstract: Recent trade agreements have moved beyond tariff reductions, encompassing provisions and obligations related to non-tariff issues. These aspects are often seen as the reflection of interest groups, able to manipulate and extract additional rents from the ratification of these agreements. We provide empirical evidence that corporate lobbying on trade agreements matters for corporate profits. We use the historical shock to U.S. trade policy – the non-ratification of the Trans-Pacific Partnership (TPP) – following the unexpected victory of Donald Trump in the 2016 U.S. presidential election. We find that stock prices of companies that lobbied in favor of the TPP underperformed following the election. On the intensive margin, we find a strong and positive relationship between the amount spent in lobbying and the cumulative losses of lobby- ing firms. Finally, by comparing the original TPP agreement with its newer version (CPTPP) without U.S. participation, we provide evidence that firms’ lobbying activity was related to having some specific provisions included in the agreement.
Abstract: Using monthly data on trade in goods between January 2016 and May 2023, this study assesses the impact of recent shocks on the fragmentation of the global economy, looking in particular at the dynamics of friend-shoring, near-shoring and decoupling between the world’s two largest economies. Results based on gravity model regressions with high-dimensional fixed effects show that trade flows have become more sensitive to geopolitical distance since the start of the war in Ukraine, leading to the first signs of overall trade fragmentation along geopolitical lines, i.e. friend-shoring. Trade in goods between hypothetical East and West blocs has grown 4 per cent slower than intra-bloc trade since the start of the war. On the other hand, we find no evidence of an increased regionalisation of world trade since the shock of the COVID-19 pandemic or the war in Ukraine. Therefore, our results suggest that near-shoring strategies did not have a large impact on world trade. Finally, our results confirm that the increased trade tensions between the world’s two largest economies have significantly reduced their bilateral trade, a trend that has been exacerbated by the geopolitical tensions and uncertainty created by the war in Ukraine.
“Lobbying on Deep Trade Agreements: How Large Firms Buy Favorable Provisions” (with Paola Conconi, In Song Kim, and Mathieu Parenti)
Abstract: Trade policy is increasingly deep, encompassing many areas that go beyond traditional trade policy, such as investment, intellectual property rights protection, and regulatory standards. Exploiting rich data available under the US Lobbying Disclosure Act, we construct a novel dataset on firm-level lobbying on deep trade policies. This provides detailed information on firms’ lobbying effort, both in terms of their expenditures on specific trade issues and federal entities they target. We show that lobbying on deep trade issues is dominated by large multinational corporations, which lobby to introduce provisions that are favorable to them. Larger firms spend more, lobby on more issues, and target more entities. To explain these patterns, we describe a model in which heterogeneous firms choose how much effort to exert lobbying on deep trade issues.
Winner of: Best Paper at the EP@P, Economics & Politics at Paris Workshop, Sciences Po Paris - LIEPP, December 2020
Abstract: I systematically explore the role of trade unions in the political economy of trade policy, studying both their lobbying expenditures and their campaign contributions. Using detailed information from lobbying reports filed under the Lobbying Disclosure Act, I first show that unions are the main opposing force to the ratification of free trade agreements (FTAs). Unions that are larger and operate in tradable sectors are more likely to lobby against FTAs and to spend more opposing these agreements. I then study union's PAC contributions to political parties. During the last three decades, more than 90% of unions' PAC contributions were directed to Democratic candidates. I show that this has drastically changed since Trump's presidential campaign. Linking data on campaign contributions, lobbying expenditures, and roll-call votes, I find that unions that lobbied against the ratification of FTAs started contributing more to Republican congressmen, benefitting particularly those who have taken an anti-trade stance.
Veugelers, R., Barbiero, F. and Blanga-Gubbay, M. D. (2013) "Meeting the manufacturing firms involved in GVCs", in Veugelers, R. (2013) "Manufacturing Europe’s future", Bruegel Blueprint 21: 107-138
"EU Trade Agreements: Past, present, and future developments", Kühne Impact Series 02-20, Kühne Center for Sustainable Globalization - University of Zurich
"A New Hope for the WTO? Past achievements, current challenges, and planned reforms", Kühne Impact Series 02-21, Kühne Center for Sustainable Globalization - University of Zurich
"Africa’s Trade Potential: Escaping the Colonial Past by Building a Self-Sustaining Future", Kühne Impact Series 04-21, Kühne Center for Sustainable Globalization - University of Zurich
"The European Green Deal: Transforming International Trade and Transportation", Kühne Impact Series 06-21, Kühne Center for Sustainable Trade and Logistic - University of Zurich
"The EU Emissions Trading System: Becoming Efficient", Kühne Impact Series 02-22, Kühne Center for Sustainable Trade and Logistic - University of Zurich
"Global Trade: A Future in Doubt?", Kühne Impact Series 03-22, Kühne Center for Sustainable Trade and Logistic - University of Zurich